Markets & Finance

Stocks Finish Higher

October 16, 2005

Stocks finished higher, with buyers taking charge in the final hour to push major indices into positive territory after some weakness around mid-day, says Standard & Poor's MarketScope. Oil prices rose, while major companies reported third-quarter earnings.

The Dow Jones industrial average climbed 60.76 points, or 0.59%, to 10,348.1, boosted by gains in General Motors and Altria Group. The broader Standard & Poor's 500 index was up 3.53 points, or 0.3%, to 1,190.1. The tech-heavy Nasdaq composite index gained 5.47 points, or 0.26%, to 2,070.3.

November West Texas Intermediate crude oil jumped $1.73 to $64.36 a barrel as Tropical Storm Wilma was expected to gear up to hurricane status by Wednesday, and perhaps enter the Gulf of Mexico over the weekend.

Tuesday's release of the September overall producer price index (PPI) is expected to jump 1.0%, while the core index rises 0.2%. Hurricane Katrina will result in a huge gain in gasoline prices and other refined product, says Action Economics. The strength in the CPI and import prices supports the upside risk on the month, says Action Economics.

Altria Group (MO) was among tobacco-related stocks rising on reports that the U.S. Supreme Court rejected the U.S. government's appeal to reinstate a potential $280 billion penalty in its case against cigarette makers.

This week's earnings calendar is very heavy, and includes major companies such as 3M (MMM), Intel (INTC), Johnson & Johnson (JNJ), Yahoo (YHOO), Coca-Cola (KO), Pfizer (PFE), Ford (F), and McDonald's (MCD), just to name a few.

In economic news, the U.S. Empire State index declined to 12.08 in October after falling to 15.58 in September in September. Prices paid climbed further to 57.29 from a revised 53.93. New orders rebounded to 24.85 from a revised 11.64. Employment fell to 9.26 from a revised 11.65. The 6-month outlook for overall business conditions softened to 32.64 from 38.14, with declines posted in both prices paid and received. The rise in prices paid and new orders may be the key for the markets, giving some support to the dollar and weighing on Treasuries, says Action Economics.

Among other economic reports this week, the Federal Reserve will release its Beige Book for the Nov. 1 policy meeting on Wednesday. The market will also get comments from various Fed members, including Chairman Alan Greenspan.

Other data releases include housing starts on Wednesday and leading indicators on Thursday.

Treasury Market

Treasury yields crept steadily higher over the course of a relatively low-volume session, shrugging off a deep plunge in the Empire State index, says Action Economics. Coming ahead of tomorrow's PPI report and on top of a rebound in crude oil above $64, this contributed to the defensive tone ahead of Greenspan's speech later tonight on energy from Tokyo, says Action Economics. The 10-year yield held below 4.50%.

World Markets

European stock markets finished with small gains on Monday. London's Financial Times-Stock Exchange 100 index was up 11.5 points, or 0.22%, at 5,286.5.

Asian markets finished mixed on Monday. In Japan, the Nikkei 225 index fell 20.25 points, or 0.15%, to 13,400.29 as profit taking ahead of earnings season outweighed a rally in the U.S. Friday. Banking and steel shares, which led the market higher over the past three months before a recent pullback, suffered the biggest losses by index points, says Standard & Poor's MarketScope.